Benami Transactions (Prohibition) Act, 1988 = whether the suit of the first appellant for the recovery of her house property filed prior to the Benami Transactions (Prohibition) Act, 1988 coming into force could be considered to be prohibited by Section 4 of that Act.= Section 4(1) of the Benami Transactions (Prohibition) Act 1988 reads as follows: “Prohibition of the right to recover property held benami.- (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.” While reversing the earlier decision of this Court in Mithilesh Kumari (supra), a bench of three Judges observed in para 11 of R. Rajagopal Reddy (supra) as follows:- “Before we deal with these six considerations which weighed with the Division Bench for taking the view that Section 4 will apply retrospectively in the sense that it will get telescoped into all pending proceedings, howsoever earlier they might have been filed, if they were pending at different stages in the hierarchy of the proceedings even up to this Court, when Section 4 came into operation, it would be apposite to recapitulate the salient feature of the Act. As seen earlier, the preamble of the Act itself states that it is an Act to prohibit benami transactions and the right to recover property held benami, for matters connected therewith or incidental thereto. Thus it was enacted to efface the then existing right of the real owners of properties held by others benami. Such an Act was not given any retrospective effect by the legislature. Even when we come to Section 4, it is easy to visualise that sub- section (1) of Section 4 states that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other shall lie by or on behalf of a person claiming to be the real owner of such property. As per Section 4(1) no such suit shall thenceforth lie to recover the possession of the property held benami by the defendant. Plaintiff’s right to that effect is sought to be taken away and any suit to enforce such a right after coming into operation of Section 4(1) that is 19-5-1988, shall not lie. The legislature in its wisdom has nowhere provided in Section 4(1) that no such suit, claim or action pending on the date when Section 4 came into force shall not be proceeded with and shall stand abated. On the contrary, clear legislative intention is seen from the words “no such ; Section 16 of the Indian Evidence Act which reads as follows:- “When there is a question whether a particular act was done, the existence of any course of business, according to which it naturally would have been done, is a relevant fact. Illustrations: (a) The question is, whether a particular letter was dispatched. The facts that it was the ordinary course of business for all letters put in a certain place to be carried to the post, and that that particular letter was put in that place, are relevant. (b) The question is, whether a particular letter reached A. The facts that it was posted in due course, and was not returned through the Dead Letter Office, are relevant.”- As far as a notice sent under postal certificate is concerned, in Mst. L.M.S. Ummu Saleema Vs. B.B. Gujaral & Anr. [1981 (3) SCC 317], a bench of three judges of this Court on the facts of that case, refused to accept that the notice sent under a postal certificate by a detenue under the Conservation of Foreign Exchange and Smuggling Activities Act, 1974, to the Assistant Collector of Customs, retracting his original statement had been duly served on the concerned office. This was because the respondent rebutted the submission by producing their file to show that such a letter had not been received in their office in the normal course of business. However, the proposition laid down in that case is relevant for our purpose. This Court observed in paragraph 6 of that judgment as follows: “6. …………The certificate of posting might lead to a presumption that a letter addressed to the Assistant Collector of Customs was posted on August 14, 1980 and in due course reached the addressee. But, that is only a permissible and not an inevitable presumption. Neither Section 16 nor Section 114 of the Evidence Act compels the court to draw a presumption. The presumption may or may not be drawn. On the facts and circumstances of a case, the court may refuse to draw the presumption. On the other hand the presumption may be drawn initially but on a consideration of the evidence the court may hold the presumption rebutted and may arrive at the conclusion that no letter was received by the addressee or that no letter was ever despatched as claimed. After all, there have been cases in the past, though rare, where postal certificates and even postal seals have been manufactured. In the circumstances of the present case, circumstances to which we have already referred, we are satisfied that no such letter of retraction was posted as claimed by the detenu.”

                                                                     REPORTABLE
                      IN THE SUPREME COURT OF INDIA

                      CIVIL APPELLATE JURISDICTION

                      CIVIL APPEAL NO. 846           OF 2011

     ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 1305 OF 2010


Samittri Devi and another.                                       ...Appellants
                                     Versus

Sampuran Singh and another                                     ...Respondents




                               JUDGMENT



Gokhale J.

              Leave Granted.


2.            This Appeal by Special Leave raises the question as to whether the

suit of the first appellant for the recovery of her house property filed prior to the

Benami Transactions (Prohibition) Act, 1988 coming into force could be

considered to be prohibited by Section 4 of that Act.


3.            This appeal seeks to challenge the judgment and order passed by a

Learned Judge of the Punjab and Haryana High Court dated 10.9.2009 in Regular

Second Appeal (R.S.A) No. 1367 of 1996 (O & M), whereby the Judge has
                                                                           2

allowed the Second Appeal filed by Respondent No. 1 herein, and set aside the

judgment and order dated 22.2.1996 passed by the Additional District Judge,

Gurdaspur in Civil Appeal No. 203 of 1991 filed by appellant No.1 herein. The

Learned Additional District Judge had allowed the Civil Appeal filed by appellant

No. 1 herein whereby he decreed Civil Suit No. 138 of 1987 filed by appellant

No.1, which suit had been dismissed by the Sub-Judge at Pathankot by his

judgment and order dated 3.10.1991.


4.           Short facts leading to this appeal are as follows:-


             The appellant No.1 herein purchased a house property situated at

Pathankot from Sarvashri Romesh Chand and Chatar Chand sons of Shri Kartar

Singh, vide registered sale deed dated 26.2.1985 for a consideration of

Rs. 40,000/-. This sale deed was, however, executed in the name of her son

namely Shri Kamal Chand (the appellant No.2 herein) and his brother-in-law

Shri Jiwan Kumar (respondent No.2 herein). The appellant no.1 paid the money

by two bank drafts for purchasing the house property which was actually in the

possession of a tenant of the previous owner i.e. Home Guard Department and it

continues to be in their possession.


5.           It is the case of the appellant No.1 that taking advantage of her old

age (presently 93 years), the above referred Kamal Chand and Jiwan Kumar

stealthily removed the sale deed from her possession, and this Jiwan Kumar sold

half share of the suit house to one Sampuran Singh (Respondent No. 1 herein)
                                                                           3

and that too without her knowledge and consent. The sale was executed by a

registered sale deed dated 13.4.1987 despite the fact that appellant No.1 had

sent, in the meanwhile, a letter dated 8.4.1987 to Respondent No. 1 herein

informing him that she was the real owner of the Suit House.


6.            The appellant No. 1 therefore, filed Suit No. 138 of 1987 on

30.9.1987 for a declaration that she was the real owner in possession of the Suit

House shown in red in the site plan attached by letters A B C D part of No.

Khasra 574/1, No. Khawat 262, No. Khatauni 401, as entered in the Jamabandi

for the year 1976-77 situated in village Daulatpur HB No. 331, Pathankot. She

prayed for a permanent injunction also restraining the defendants from

alienating any part of the suit house and forcibly interfering with the possession

of the plaintiff of the suit house. By moving an amendment, she claimed an

alternative relief for a decree of Rs. 40,000/- with interest.    Her son Kamal

Chand was joined as defendant No. 1, his brother-in-law the above referred

Jiwan Kumar as defendant No. 2, and the purchaser Sampuran Singh as

defendant No. 3. They are appellant No.2, respondent No.2 and respondent No.

1 respectively to this appeal.


7.            Defendant No. 1 admitted the entire claim of the appellant, but the

defendant No. 2 disputed it, and contended that half of the consideration of Rs.

40,000/- had been paid by him. He denied that it was a Benami Transaction.

Defendant No. 3 filed his written statement and contended in para 5 thereof that

even if it is proved to be a Benami Transaction, due to the recent legislation of
                                                                             4

Benami Transactions (Prohibition) Act 1988, the defendants Nos. 1 & 2 were the

owners of the Suit property, and that the alienation of his share in the property

by defendant No. 2 in his favour had been effected legally. He contended that

he had purchased the share of the defendant No. 2 by sale deed dated

13.4.1987 for a consideration of Rs. 30,000/-, and that he was a bonafide

purchaser for value, and that the Suit should be dismissed.


8.            The trial court framed the necessary issues including whether the

sale deed dated 26.2.1985 was Benami, and whether the sale deed dated

13.4.1987 was illegal, and also whether defendant No. 3 was a bonafide

purchaser without notice.


9.            The appellant No. 1 laid the evidence amongst others of a clerk

from a branch of State Bank of Patiala at Chaki, Pathankot, who deposed to the

fact that the appellant had made the payment for the sale consideration from her

account. Defendant No. 2 had contended that he had arranged Rs. 20,000/-

from friendly loans to purchase half the share of the Suit House, but he did not

lead any evidence for proving the availability of such funds with him. The Trial

Court therefore, held that it was obvious that the payment was not made by

defendant nos. 1 & 2, but by the plaintiff i.e. the appellant No.1 herein.


10.           The appellant No.1 had produced before the trial court a copy of

the notice dated 8.4.1987 which she had sent to defendant no. 3, to point out to

him that she was the real owner of the suit house. She produced the same
                                                                           5

alongwith the certificate of posting. The sale deed between defendant Nos. 2 &

3 was executed on 13.4.1987. The trial court held that the delivery of the notice

was not proved, and therefore, defendant No. 3 was a bonafide purchaser for

valuable consideration without notice. That apart, at the time when the Suit was

decided on 3.10.1991, the law laid down by this Court in Mithilesh Kumari and

Anr. Vs. Prem Behari Khare [AIR 1987 SC 1247] : [1989 (2) SCC 95]

was governing the field viz. that the provisions of Benami Transactions

(Prohibition) Act 1988 were retroactive. It had been held that the prohibition

under Section 4 of the Act to recover the Benami property was applicable to

suits, claims or action pending on the date of commencement of the Act. The

appellant No.1 had filed her suit on 30.9.1987.        The Benami Transactions

(Prohibition) Act 1988 came into force on 5.9.1988. Thus, this Suit was pending

on the date on which the Act came into force.         The Trial Court, therefore,

followed the judgment in Mithilesh Kumari (supra), and held that the appellant

no longer retained the right to recover the property from the Benami holder.

The suit was, therefore, dismissed for being barred by virtue of the provisions of

the said Act, though without any order as to costs.


11.          The appellant No.1 carried the matter in first appeal to the

Additional District Judge, Gurdaspur.   As we have noted, the trial court had

already held that appellant No. 1 had purchased the suit house by making the

payment from her account. It had, however, declined to decree her suit on two

grounds, firstly due to the prohibition under Section 4 of the Benami
                                                                             6

Transactions (Prohibition) Act 1988 as interpreted in Mithilesh Kumari judgment

(supra), and secondly on the ground that the appellant did not prove the service

of her notice dated 8.4.1987 on respondent No. 1 herein. By the time the first

appeal was being heard, the judgment of the two Judges bench in Mithilesh

Kumari (supra) had been over-ruled by a bench of three Judges of this Court in

R.Rajagopal Reddy Vs. Padmini Chandrasekharan decided on 31.1.1995

and reported in [AIR 1996 SC 238] : [1995 (2) SCC 630]. This Court had

held that Section 4 or for that matter the Act as a whole was not a piece of

declaratory or curative legislation.   It creates substantive rights in favour of

benamidars and destroys substantive rights in favour of the real owners.          It

creates a new offence of entering into such benami transactions.            It had

therefore, been held that when a statutory provision creates a new liability and a

new offence, it would naturally have a prospective operation, and Section 4 will

not apply to pending suits which were already filed and entertained prior to the

Act coming into force. The first appellate Court therefore, held that the suit filed

by appellant No.1 was not prohibited by the said Act. As far as the notice dated

8.4.1987 is concerned, the Court held that there was a presumption under the

law that the letter which was proved to have been posted well in advance must

have reached the addressee. The first appellate court therefore, held that the

notice will have to be presumed to have been served, and yet respondent No. 1

herein got the sale deed executed on 13.4.1987. It was therefore, held that

respondent No. 1 could not be held to be a bonafide purchaser without any

notice of the rights of appellant No.1 in the suit property. The first appellate
                                                                           7

court therefore, decreed the suit filed by appellant No.1 to the effect that she

was the real owner in possession of the house and the sale deed dated

13.4.1987 was null and void.        It also granted an injunction against the

defendants that they shall not alienate any part of the suit house and will not

interfere in her    possession of the suit   house. The Court awarded cost of

Rupees 1,000/-.


12.          Feeling aggrieved by this decision, the first respondent herein filed

a Regular Second Appeal bearing RSA No. 1367 of 1996. The Learned single

Judge of the High Court, who heard the matter, framed the following substantial

question of law - "Whether the Learned Additional District Judge has misread the

evidence on record while coming to the conclusion that the suit property was

benami property of the plaintiff." The Learned Judge did not dispute the fact

that appellant No. 1 had purchased the suit house out of her money, but he

noted that the office of the Home Guard continued in that property.            The

Learned Judge did not give any importance to the notice dated 8.4.1987 being

sent under postal certificate, but held that there was nothing on record to prove

that defendant No.3 had been served with that notice.        The Learned Single

Judge therefore, found fault with the finding of the Additional District Judge to

the effect that defendant No. 3 (Respondent No. 1 herein) was not a bonafide

purchaser, and further held that, it amounted to misreading of evidence. The

Regular Second Appeal was therefore, allowed and the judgment and decree of

the Addl. District Judge was set aside.
                                                                           8

13.          Being aggrieved by the judgment and order passed by the High

Court this Appeal has been filed by the appellant. This time, the son of appellant

No.1, the original defendant No.1 has joined her as appellant No. 2.

Mr. Saikrishna Rajagopal, learned counsel appearing for the appellants pointed

out that the order passed by the High Court does not deal with the law laid down

in the judgment of this Court in R. Rajagopal Reddy case (Supra).              The

Judgment was binding on the Learned Judge, and in view thereof the suit filed

by the appellant No.1 was not hit by the prohibition under Section 4 of the Act.

He also pointed out that the appellants as well as the respondent No. 1 were

staying in the same area i.e. College Road, Pathankot, and therefore, the

Learned Additional District Judge was right in his inference that the notice dated

8.4.1987 must be presumed to have been duly served on respondent No. 1 prior

to 13.4.1987 when respondent No. 3 purchased half share of the suit house. He

submitted that the appellants were ready to return the amount of Rs.30,000/-

with interest to   respondent No. 1 which amount he claims to have paid to

respondent No. 2 to purchase his half share in the property.


14.          As against this submission of the appellant, Mr. V.K. Monga,

learned counsel appearing for respondent No. 1 repeated the same submissions

made in the courts below, namely, that he was a bonafide purchaser without

notice, and that the original defendant No. 2 had purchased half the share of the

suit house from his money, and from him the respondent No.1 had purchased

that share, and therefore, the present appeal should be dismissed.
                                                                             9

15.           We have noted the submission of the rival parties. As far as the

purchase of the suit house by the appellant No. 1 from her own money is

concerned that finding of the trial court has remained undisturbed all throughout

and cannot be re-opened in this appeal. The appellant No.1 led cogent evidence

before the trial court, and it had been held in her favour that it is out of her

funds that she had purchased the suit house. The submission of the original

defendant no. 2 that he had arranged the amount of Rs. 20,000/- through

friendly loans was negated by the trial court since there was no supporting

evidence at all. There is no reason for us to disturb that finding. Once the High

Court held that the appellant had purchased the suit house out of her funds, it

ought to have held that it follows that the defendant No. 2 had no right to deal

with it or to sell his half share merely because his name was shown as a

purchaser alongwith the appellant No. 2.       Consequently the purchase of the

share of the defendant No. 2 by the respondent No. 1 herein without the consent

of the appellant No. 1 gave him no rights whatsoever. Therefore, the High Court

ought to have held that the suit of appellant No. 1 for declaration of her

ownership to be valid and maintainable.


16.       The High Court has clearly erred in ignoring the binding judgment of a

Bench of three Judges of this Court in R. Rajagopal Reddy (supra).          By this

decision, this Court had reversed its earlier judgment in Mithilesh Kumari (supra)

and had held in terms that suits filed prior to the application of the act would not
                                                                                10

be hit by the prohibition under Section 4 of that act. Section 4(1) of the Benami

Transactions (Prohibition) Act 1988 reads as follows:


      "Prohibition of the right to recover property held benami.-
      (1) No suit, claim or action to enforce any right in respect of any
      property held benami against the person in whose name the
      property is held or against any other person shall lie by or on
      behalf of a person claiming to be the real owner of such property."

      While reversing the earlier decision of this Court in Mithilesh Kumari

(supra),   a   bench    of   three   Judges     observed    in   para    11      of

R. Rajagopal Reddy (supra) as follows:-


              "Before we deal with these six considerations which weighed
      with the Division Bench for taking the view that Section 4 will apply
      retrospectively in the sense that it will get telescoped into all
      pending proceedings, howsoever earlier they might have been
      filed, if they were pending at different stages in the hierarchy of
      the proceedings even up to this Court, when Section 4 came into
      operation, it would be apposite to recapitulate the salient feature of
      the Act. As seen earlier, the preamble of the Act itself states that it
      is an Act to prohibit benami transactions and the right to recover
      property held benami, for matters connected therewith or
      incidental thereto. Thus it was enacted to efface the then existing
      right of the real owners of properties held by others benami. Such
      an Act was not given any retrospective effect by the legislature.
      Even when we come to Section 4, it is easy to visualise that sub-
      section (1) of Section 4 states that no suit, claim or action to
      enforce any right in respect of any property held benami against
      the person in whose name the property is held or against any other
      shall lie by or on behalf of a person claiming to be the real owner
      of such property. As per Section 4(1) no such suit shall thenceforth
      lie to recover the possession of the property held benami by the
      defendant. Plaintiff's right to that effect is sought to be taken away
      and any suit to enforce such a right after coming into operation of
      Section 4(1) that is 19-5-1988, shall not lie. The legislature in its
      wisdom has nowhere provided in Section 4(1) that no such suit,
      claim or action pending on the date when Section 4 came into
      force shall not be proceeded with and shall stand abated. On the
      contrary, clear legislative intention is seen from the words "no such
                                                                               11

       claim, suit or action shall lie", meaning thereby no such suit, claim
       or action shall be permitted to be filed or entertained or admitted
       to the portals of any court for seeking such a relief after coming
       into force of Section 4(1)." (Emphasis supplied)

17.          In the impugned judgment, the High Court nowhere refers to the

judgment in R. Rajagopal Reddy's case (supra) although the same was very

much referred to and relied upon by the appellant to counter the contrary

submission of the respondent No. 1. The High Court has therefore, committed a

serious error of law in holding that the Additional District Judge has misread the

evidence on record while coming to the conclusion that the suit property was the

Benami Property of the plaintiff-appellant No.1 herein and that her suit to

enforce the right concerning the same shall not lie. In fact there was no such

misreading of evidence on the part of the first appellate court, and hence there

was no occasion for the High Court to frame such a question of law in view of

the prevailing judgment in R. Rajagopal Reddy which had been rightly followed

by the first appellate court.


18.       The High Court has held that there is nothing on record to suggest that

respondent No.1 herein had, in fact, been served with the notice dated 8.4.1987

and thereby reversed the finding rendered by the first appellate court.          It is

material to note in this behalf that it was canvassed by respondent No.1 before

the first appellate court that a certificate of posting is very easy to procure and it

does not inspire confidence. The Additional District Judge observed that there

was no dispute with this proposition of law, but there was no such averment or

even allegation against appellant No.1 herein, that she had procured the
                                                                                   12

certificate of posting nor was there any such pleading to that effect. It is on this

background that the first appellate court has drawn the inference that the notice

must be deemed to have been served within the period of five days thereafter

i.e. before 13.4.1987, the date on which the respondent No.1 herein entered into

an agreement to purchase the suit property. It is also material to note that the

appellant's premises are situated on College Road, Pathankot and so also the

residence of the first respondent where the notice was sent. Therefore, there

was nothing wrong in drawing the inference which was permissible under Section

114 of the Evidence Act that such notice must have been duly served in the

normal course of business before 13.4.1987.


19.            We may fruitfully refer to a few judgments laying down the

propositions relating to service of notice.      To begin with, we may note two

judgments in the context of the notice to quit, sent to the tenants under Section

106 of the Transfer of Property Act 1882, though both the judgments are

concerning the notices sent by registered post. Firstly, the judgment in the case

of Harihar Banerji Vs. Ramshashi Roy [AIR 1918 PC 102], wherein the

Privy Council quoted with approval the following observations in Gresham

House Estate Co. Vs. Rossa Grande Gold Mining Co. [1870 Weekly

Notes 119] to the following effect:


       "..........if a letter properly directed, containing a notice to quit, is
       proved to have been put into the post office, it is presumed that
       the letter reached its destination at the proper time according to
       the regular course of business of the post office, and was received
       by the person to whom it was addressed. That presumption would
                                                                                   13

       appear to their Lordships to apply with still greater force to letters
       which the sender has taken the precaution to register, and is not
       rebutted but strengthened by the fact that a receipt for the letter is
       produced signed on behalf of the addressee by some person other
       than the addressee himself."

20.        Secondly, we may refer to the judgment of a Full Bench of the Allahabad

High Court in the case of Ganga Ram Vs. Smt. Phulwati [AIR 1970

Allahabad 446], wherein the Court observed in paragraphs 12 and 13 as

follows:


       "12. When a registered article or a registered letter is handed
       over to an accepting or receiving post office, it is the official duty of
       the postal authorities to make delivery of it to the addressee.
       Human experience shows that except in a few exceptional cases
       letters or articles received by the post office are duly, regularly and
       properly taken to the addressee. Consequently as a proposition it
       cannot be disputed that when a letter is delivered to an accepting
       or receiving post office it is reasonably expected that in the normal
       course it would be delivered to the addressee. That is the official
       and the normal function of the post office.

       13.   Help can also be taken from Section 16 of the Indian
       Evidence Act which reads as follows:-

       "When there is a question whether a particular act was done, the
       existence of any course of business, according to which it naturally
       would have been done, is a relevant fact.

       Illustrations:

       (a)    The question is, whether a particular letter was dispatched.
       The facts that it was the ordinary course of business for all letters
       put in a certain place to be carried to the post, and that that
       particular letter was put in that place, are relevant.

       (b)    The question is, whether a particular letter reached A. The
       facts that it was posted in due course, and was not returned
       through the Dead Letter Office, are relevant."
                                                                               14

21.       As far as a notice sent under postal certificate is concerned, in Mst.
L.M.S. Ummu Saleema Vs. B.B. Gujaral & Anr. [1981 (3) SCC 317], a
bench of three judges of this Court on the facts of that case, refused to accept
that the notice sent under a postal certificate by a detenue under the
Conservation of Foreign Exchange and Smuggling Activities Act, 1974, to the
Assistant Collector of Customs, retracting his original statement had been duly
served on the concerned office.   This was because the respondent rebutted the
submission by producing their file to show that such a letter had not been
received in their office in the normal course of business.          However, the
proposition laid down in that case is relevant for our purpose.        This Court
observed in paragraph 6 of that judgment as follows:

      "6. ............The certificate of posting might lead to a presumption
      that a letter addressed to the Assistant Collector of Customs was
      posted on August 14, 1980 and in due course reached the
      addressee. But, that is only a permissible and not an inevitable
      presumption. Neither Section 16 nor Section 114 of the Evidence
      Act compels the court to draw a presumption. The presumption
      may or may not be drawn. On the facts and circumstances of a
      case, the court may refuse to draw the presumption. On the other
      hand the presumption may be drawn initially but on a
      consideration of the evidence the court may hold the presumption
      rebutted and may arrive at the conclusion that no letter was
      received by the addressee or that no letter was ever despatched as
      claimed. After all, there have been cases in the past, though rare,
      where postal certificates and even postal seals have been
      manufactured. In the circumstances of the present case,
      circumstances to which we have already referred, we are satisfied
      that no such letter of retraction was posted as claimed by the
      detenu."

22.    The proposition laid down in this judgment has been followed in two

subsequent cases coming before this Court in the context of Section 53(2) of the

Companies Act 1956 providing for presumption of service of notice of the board

meeting, sent by post. In M.S. Madhusoodhanan vs. Kerala Kaumudi (P)

Ltd. and others [2004 (9) SCC 204], a bench of two Judges of this Court
                                                                            15

referred to the proposition in Mst. L.M.S. Ummu Saleema (supra) in para 117 of

its judgment, and held in the facts of that case, that the notice by postal

certificate could not be presumed to have been effected, since the relations

between the parties were embittered, and the certificate of posting was suspect.

As against that, in a subsequent matter under the same section, in the case of

VS Krishnan Vs. Westfort Hi-Tech Hospital Ltd. [2008 (3) SCC 363],

another bench of two Judges referred to the judgment in M.S. Madhusoodhanan

(supra), and drew the presumption in the facts of that case that the notice sent

under postal certificate had been duly served for the purposes of Section 53(2)

of the Companies Act, 1956, since the postal receipt with post office seal had

been produced to prove the service. Thus, it will all depend on the facts of each

case whether the presumption of service of a notice sent under postal certificate

should be drawn. It is true that as observed by the Privy Council in its above

referred judgment, the presumption would apply with greater force to letters

which are sent by registered post, yet, when facts so justify, such a presumption

is expected to be drawn even in the case of a letter sent under postal certificate.


23.       Having seen the factual and the legal position, we may note that in the

present case it has already been established that the appellant had purchased

the property out of her own funds. Therefore, it could certainly be expected that

when she came to know about the clandestine sale of her property to

respondent No.1, she would send him a notice, which she sent on 8.4.1987. As

noted earlier, the notice is sent from one house on the College Road to another
                                                                            16

house on the same road in the city of Pathankot. The agreement of purchase is

signed by the defendant No.3 five days thereafter i.e. 13.4.1987. The appellant

had produced a copy of the notice along with postal certificate in evidence.

There was no allegation that the postal certificate was procured.           In the

circumstances, it could certainly be presumed that the notice was duly served on

respondent No.1 before 13.4.1987.         The High Court, therefore, erred in

interfering in the finding rendered by the Additional District Judge that

respondent No.1 did receive the notice and, therefore, was not a bona fide

purchaser for value without a notice.


24.          The judgment of the High Court, therefore, deserves to be set

aside.   The appellants through their counsel have, however, in all fairness

offered to compensate the first respondent herein by paying him the amount of

Rs. 30,000/- with appropriate interest. The first respondent did not evince any

interest in this suggestion. Yet, the end of justice will be met, if this amount of

Rs. 30,000/- is returned by the appellants to him as offered by them with simple

interest at the rate of 10%.


25.          In the circumstances this appeal is allowed.      The Judgment and

order dated 10.2.2009 passed by the High court in R.S.A No. 1367 of 1996 and

that of the Sub-Judge, Pathankot in Civil Suit No. 138 of 1987 dated 3.10.1991

are set aside. The judgment and order dated 22.2.1996 passed by Addl. District.

Judge, Gurdaspur in Civil Appeal No. 203 of 1991 is confirmed. The suit filed by

the appellant No.1 bearing Civil Suit No. 138 of 1987 is decreed and it is declared
                                                                                                  17

that the appellant No. 1 is the owner of the suit house.                     There shall be a

permanent injunction restraining the defendants from alienating any part of the

suit house and forcibly interfering into the possession of the plaintiff of the house

in dispute.     In view of the offer given by the appellants to compensate the first

respondent, the appellants shall pay him the amount of Rs. 30,000/-(Rupees

thirty thousand only), with simple interest at the rate of 10% for the period from

13.4.1987 till the decision of the first appellate court i.e. 22.2.1996, within twelve

weeks from today, though it is up to the respondent No. 1 to receive the

amount. The interest is restricted upto 22.2.1996 for the reason that respondent

No.1 ought to have accepted the decision of the First Appellate Court,

particularly in view of the judgment of this Court in R. Rajagopal Reddy (supra),

and should not have dragged the appellants to the High Court in Second appeal.


26.           The first respondent will pay a cost of Rs. 10,000/- to the 1 st appellant

for this appeal.


                                                    ........................................J.
                                                    ( Dalveer Bhandari )


                                                    .........................................J.
                                                    ( H.L. Gokhale )

New Delhi
Dated: January 21, 2011

Benami Transaction (Prohibition) Act, 1988 = whether the facts disclosed would indicate that even after coming into force of the Act the defence under Secion 4 can be available. Admittedly, the transaction in question was registered on 24th August, 1970. The suit was filed on 5th of July 1984 which was long before coming into force of the Act. It is an admitted position that the written statement in the suit taking plea of benami was also filed by the appellant long before the Act had come into force. Therefore, it was not a case where Section 4(2) of the Act will have a limited operation in the pending suit after Section 4(2) of the Act had come into operation. It is true that the judgment of the trial court was delivered after the Act had come into force but that could not fetter the right of the appellant to take the plea of benami in his defence. Since the Act cannot have any retrospective operation in the facts and circumstances of the present case, as held by this Court in the aforesaid decision, we are therefore of the view that the appellant was entitled to raise the plea of benami in the written statement and to show and prove that he was the real owner of the suit property and that the respondent was only his benamidar. ;sub-section (2) of Section 3 clearly says that nothing in sub-section (1) shall apply to purchase of property of any person in the name of his wife, unmarried daughter and it shall be presumed, unless the contrary is proved, that suit property had been purchased for the benefit of the unmarried daughter. = Section 3 deals with Prohibition of benami transaction. Sub-section (1) clearly prohibits that no person shall enter into benami transaction. However, sub-section (2) of Section 3 clearly says that nothing in sub-section (1) shall apply to purchase of property of any person in the name of his wife, unmarried daughter and it shall be presumed, unless the contrary is proved, that suit property had been purchased for the benefit of the unmarried daughter. Section 3(2) makes it abundantly clear that if a property is purchased in the name of an unmarried daughter for her benefit, that would only be a presumption but the presumption can be rebutted by the person who is alleging to be the real owner of the property by production of evidences or other materials before the court. In this case, the trial court as well as the appellate court concurrently found that although the suit property was purchased in the name of the respondent but the same was purchased for the interest of the appellant. We are therefore of the opinion that even if the presumption under section 3(2) of the Act arose because of purchase of the suit property by the father ( in this case appellant ) in the name of his daughter ( in this case respondent ), that presumption got rebutted as the appellant had successfully succeeded by production of cogent evidence to prove that the suit property was purchased in the benami of the respondent for his own benefit. ;whether the concurrent findings of fact could be set aside by the High Court in the second appeal. = From the judgment of the High Court we further find that the concurrent findings of fact were set aside not on consideration of the findings of fact arrived at by the courts below but only on the basis of the arguments of the learned Advocate of the respondent. This was also not permissible to the High Court in Second Appeal to come to a contrary findings of its own only on the basis of the arguments of the learned counsel for the respondent without considering the findings of the trial court as well as the appellate court. (See [2002(9) SCC 735, Gangajal Kunwar (Smt.) and Ors. Vs. Sarju Pandey (Dead) by LRs & Ors.] ). It is equally settled that High Court in second appeal is not entitled to interfere with the concurrent findings of fact arrived at by the courts below until and unless it is found that the concurrent findings of fact were perverse and not based on sound reasoning.

CASE NO.:
Appeal (civil)  2867 of 2000

PETITIONER:
G.Mahalingappa          

RESPONDENT:
G.M. Savitha        

DATE OF JUDGMENT: 09/08/2005

BENCH:
D.M. DHARMADHIKARI & TARUN CHATTERJEE

JUDGMENT:
J U D G M E N T
TARUN CHATTERJEE, J.

This is an unfortunate litigation between a father and his married
daughter on the right of ownership of a house measuring about 40 feet
by 30 feet in Khata No.54 of Garehatty Village in Chitradurga Taluk
in the State of Karnataka (hereinafter referred to as the "suit
property").
The appellant, who suffered defeat in second appeal before the
High Court at Bangalore (Karnataka), filed  a Special Leave Petition
which on admission got registered as a regular appeal being Civil
Appeal No. 2867/2000  in this Court.

The appellant is the father of the respondent.  The suit property
was purchased by the appellant in the name of the respondent by a
registered sale deed dated 24th of August, 1970 when the respondent
was a minor of seven years of age.   Subsequently, her marriage was
settled and at that point of time she was assured that the respondent
shall not be disturbed as she was given to understand that the suit
property was her own property.  She was married to one Shri
C.Thippeswamy on 4th of December, 1980.  Relationship between the
appellant and the  respondent was cordial till 8th of October, 1983, and
only thereafter relationship became strained.  At that stage she asked
for vacation of the suit property not only from the appellant and his
family but also from the tenants who were defendants 2 to 5 in the
suit and for payment of rent to her.  The appellant and the tenants had,
however,  refused to vacate their  respective portions of the suit
property in their possession or to pay rent to her.  Accordingly, the
respondent was constrained to file the suit for declaration of title and
recovery of possession in respect of the suit property on the averment
that since the suit property stood in her name,  and the same was
purchased for the benefit of the respondent and as a security for her
marriage she was entitled to a decree for declaration and possession.
The suit was however filed on 5th of July, 1984.

The appellant resisted the claim of the respondent on various
grounds by filing a written statement.  According to the appellant, the
suit property was purchased by his own funds in the benami of her
daughter.  He also denied the allegation that the suit property was
purchased for and on behalf of the respondent under the sale deed
dated 24th August, 1970 nor it was purchased as a security for her
marriage.  According to him, the respondent was born on 5th
November, 1963 and immediately after the birth an astrologer was
contacted from whom the appellant ascertained that she was born on
an auspicious nakshatra and immediately thereafter he made up his
mind to purchase a site with a view to construct a house for his
residence.  Accordingly, he  purchased the suit property for a sum of
Rs.500/-.  It was not the intention of the appellant to create any
benefit, any right in the suit property to the respondent.   However, in
the year 1984, the suit property was bequeathed by a Will in favour of
the  respondent and two sons. After the suit property was purchased in
the benami of the respondent, he made improvement of the suit
property and in doing so he mortgaged the suit property in favour of
one Srinivasa Setty and obtained a loan of Rs.3,000/- on 15th
September, 1972.  Thereafter, he purchased another site adjacent to
the suit property under a sale deed dated 23rd May, 1972.   That sale
deed was also obtained in the name of the respondent out of love and
affection.  At that time the  respondent was about nine years old.  The
rest of the mortgaged amount  was utilized for construction of the
back portions of the house after spending his own money.  After
improving the same he constructed four portions which were in
occupation of the tenants, and he himself discharged the mortgaged
loan and other loans incurred for construction of the suit property.  He
also obtained permission of the Deputy Commissioner for alienation
of the suit property for non-agricultural purposes.  He paid taxes
levied by the Revenue Authorities in respect of construction of the
house.  He also paid alienation charges and Kandayam of  the suit
property from time to time.  Accordingly, the appellant sought for
dismissal of the suit inter alia on the ground that he was the real
owner and in possession of the suit property and the  respondent was
merely a benamidar in respect of the same.  Parties went into trial
with the  following issues:

1) Does the plaintiff prove that she is the owner of the suit
property?
2) Is she entitled to possession of the suit property as contended
by her?
3) Is she entitled for damages as claimed by her?
4) To what relief the plaintiff was entitled, if any?

An additional issue was framed which is of the following effect:

Does defendant No.1 prove that the suit was purchased
nominally in the name of the plaintiff under the circumstances
pleaded in the written statement, the plaintiff is a benamidar and he is
the real owner of the suit property, as contended?

Parties went to trial after adducing evidence to support their
respective claims as made out in the pleadings.
Both the courts found on consideration of the oral and
documentary evidence on record as well as the pleadings that 

1) the appellant had paid the purchase money.
2) the original title deeds were with the appellant.
3) the appellant had mortgaged the suit property for raising loan
to improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant Nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to
show that the transaction was benami in nature.

                On the aforesaid concurrent findings of fact it was held that
the respondent had failed to prove that she was the real owner of the
suit property and that the appellant was however the real owner of the
same and the respondent  was only a benamidar of the appellant.

                 Accordingly,  the appellate court as well as the trial court
dismissed the suit of the respondent.

Feeling aggrieved by the concurrent decisions of the
appellate court as well as the trial court, a second appeal was filed
before the High Court at Bangalore, which, however, had set aside the
concurrent decisions and decreed the suit of the respondent only on
the ground that the purchase by the appellant in the name of the
respondent was intended for the benefit of the respondent.   While
coming to this conclusion, the High Court had taken into
consideration the fact that since the appellant had already executed a
Will bequeathing his property to the  respondent and two other sons,
which would, according to the High Court, amply show that the
intention of the  appellant to purchase the suit property in the name of
the respondent was to benefit the respondent.  In our view, this
finding on the face of the record is erroneous and perverse.   This
finding, according to us, was arrived at by the High Court in the
second appeal without any material on record to support such finding
nor it was based after considering the oral and documentary evidence
as well as the findings of fact arrived at by the trial court and appellate
court.  On the other hand,  in our view,  the findings of the appellate
court as well as the trial court were based on due consideration of oral
and documentary evidence on record and pleadings of the parties.    
To consider the intention to purchase the suit property for the benefit
of the respondent, in our view,  the  fact of bequeathing the suit
property by executing a Will by the appellant in favour of respondent
and two sons could not at all be a factor for consideration.  The
execution of the Will by the appellant in favour of his sons and the
respondent would only indicate that the suit property was treated as
the property of his own and the respondent was never accepted by him
to be a real owner of the same.  The other ground on which the
concurrent findings of fact were set aside and suit was decreed is to
the following effect:

"Even otherwise, as could be gathered from the
evidence and representation made at the Bar, her father
used to purchase the property in the name of all his sons
and daughters on auspicious days.  It can be clearly
gathered that the intention of the father was to benefit his
children to avoid any possible conflict or dispute that may
arise between them with reference to sharing of the
properties after his life time.  Therefore, taking the view on
equity as well, and the cumulative circumstances, I am
inclined to hold that the plaintiff is entitled to be held as
the owner of the property."

We are unable to agree with this conclusion of the High Court.
It is difficult to rely on the representation from the Bar that the
appellant used to purchase properties in the names of his children on
auspicious days and for that the intention of the appellant to purchase
the suit property for the benefit of the daughter only must be
presumed without having any material to support this conclusion from
the record.  We must not forget that the High Court was dealing with
a second appeal which was filed against the concurrent findings of
fact  based on consideration of oral and documentary evidence
adduced by the parties and such findings were on sound reasoning.
Even otherwise, we are of the view that the presumption that the suit
property was purchased for the benefit of the respondent  only was
amply rebutted by the appellant by adducing evidence that the suit
property, though purchased in the name of the respondent, was so
purchased for the benefit of the appellant and his family.
As noted hereinearlier,  the appellate court as well as the trial
court on consideration of all the materials including oral and
documentary evidence and on a sound reasoning  after considering the
pleadings of the parties came to concurrent findings of fact that  
purchase of the suit property by the appellant in the name of the
respondent was benami in nature.    As noted herein earlier, the
following findings of fact were arrived at by the appellate court and
the trial court  to conclude that the transaction in question was benami
in nature :-

1) the appellant had paid the purchase money.
2) the original title deed was with the appellant. And
3) the appellant had mortgaged the suit property for raising loan to
improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant Nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to show
that the transaction was benami in nature.

Keeping these concurrent findings of fact in our mind
which would conclusively  prove that the transaction in question was
benami in nature, let  us now consider whether the appellant was
entitled to raise the plea of benami in view of introduction of the
Benami Transaction (Prohibition) Act, 1988 (In short "Act") and
whether the Act was retrospective in operation.  If so, in view of
Section 4(2) of the Act, plea of benami in the defence of the appellant
was not available to him.
Before a  two Judges Bench decision of this Court,  in the
case of Mithilesh Kumari  and another Vs. Prem Behari Khare
1989(2) SCC 95 this question had cropped  up.   In that decision, it
was  held that the question of benami cannot be taken as a plea either
in the plaint or in the written statement even when the sale deed was
executed and registered before the introduction of the Act and  when
the suit was filed before the Act had come into force.  Before we
proceed further, we may remind ourselves of certain provisions of the
Act.
Section 2 (a) defines 'benami transactions'  which means any
transaction in which property is transferred to one person for a
consideration paid or provided by another person.  Section 3  (1) and
(2) reads as under:

3(1) "No person shall enter into any benami
transactions.
(2) Nothing in sub-section(1) shall apply to the
purchase of property by any person in the name of his wife
or unmarried daughter and it shall be presumed, unless the
contrary is proved, that the said property had been
purchased for the benefit of wife or the unmarried
daughter." (Underlining is ours)

Section 4  of the Act prohibits the right to recover property held 
benami. It reads  as under:

4(1) "No suit, claim or action to enforce any right in 
respect of any property held benami against the person in 
whose name the property is held or against any other 
person shall lie by or on behalf of a person claiming to be 
the real owner of such property.

(2) No defence based on any right in respect of any 
property held benami, whether against the person in whose 
name the property is held or against any other person, shall 
be allowed in any suit, claim or action by or on behalf of a 
person claiming to be the real owner of such property." 
(underlining is ours)

Since in this case, we are concerned with the question whether the 
appellant was entitled to raise the plea of benami in his defence in 
view of the bar imposed in Section 4(2) of the Act,  let us now confine 
ourselves to the bar imposed in Section 4(2) of the Act of taking this 
plea in his defence and to the question of retrospective operation of 
this section or this provision is prospective in operation.
Now, therefore, the question arises is whether under section 4(2) 
of the Act,  defence can be allowed to be raised on any right in respect 
of any property held benami, whether against the person in whose 
name the property is held or against any other person, shall be 
allowed in any suit, claim or action or on behalf of a person claiming 
to be real owner of such property.  As noted already, this question
cropped up for decision before this Court in the case of Mithilesh
Kumari and Another  Vs.  Prem Behari Khare 1989 (2) SCC 95.   In
fact, the retrospective operation of this provision, as noted herein
earlier, was answered in the affirmative in the aforesaid decision.  
However, the correctness of that decision was doubted and an order
was passed by this Court subsequently referring this question of
retrospectivity for decision to a 3-Judges Bench of this Court.  In the
case of R.Rajagopal Reddy (Dead) by LRs.  And Ors.  Vs.  Padmini
Chandrasekharan (Dead) by LRs.  1995 (2) SCC 630,  S.B.
Majmudar, J. (As His Lordship then was) writing the judgment  for
the Three Judges Bench could not agree with the views expressed in
Mithilesh Kumari's case and held that the Act was prospective in
nature and it has no retrospective operation excepting certain
observations made in respect of some cases which would be
mentioned hereinafter.   In paragraph 10 it was observed as follows:-  
"though the Law Commission recommended retrospective
applicability of the proposed legislation, Parliament did not make the
Act or any of its sections retrospective in its wisdom.".   Thereafter on
a careful consideration of the provisions made under sections 3 and 4
of the Act, it was observed:

"A mere look at the above provisions shows that the
prohibition under Section 3(1) is against persons who are
to enter into benami transactions and it has laid down that
no person shall enter into any benami transaction which
obviously means from the date on which this prohibition
comes into operation i.e. w.e.f. 5/9/1988.  That takes care
of future benami transactions.  We are not concerned with
sub-section (2) but sub-section (3) of Section 3 also throws
light on this aspect.  As seen above, it states that whoever
enters into any benami transaction shall be punishable with
imprisonment for a term which may extend to three years
or with find or with both.  Therefore, the provision creates
a new offence of entering into such benami transaction.  It
is made non-cognizable and bailable as laid down under
sub-section (4)  It is obvious that when a statutory
provision creates new liability and new offence, it would
naturally have prospective operation and would cover only
those offences which take place after Section 3(1) comes
into operation."           (Underlining is ours).

In paragraph 11 of the said decision of this Court, the Supreme
Court further observed "On the contrary, clear legislative intention is
seen from the words "no such claim, suit or action shall lie", meaning
thereby no such suit, claim or action shall be permitted to be filed or
entertained or admitted to the portals of any court for seeking such a
relief after coming into force of Section 4(1)."  (underline is ours).

In the same paragraph the Supreme Court observed:

" With respect, the view taken that Section 4(1) would
apply even to such pending suits which were already filed
and entertained prior to the date when the section came
into force and which has the effect of destroying the then
existing right of plaintiff in connection with the suit
property cannot be sustained in the face of the clear
language of Section 4(1).  It has to be visualized that the
legislature in its wisdom has not expressly made Section 4
retrospective.  Then to imply by necessary implication that
Section 4 would have retrospective effect and would cover
pending litigations filed prior to coming into force of the
section would amount to taking a view which would run
counter to the legislative scheme and intent projected by
various provisions of the Act to which we have referred
earlier.  It is, however, true as held by the Division Bench
that on the express language of Section 4(1) any right
inhering in the real owner in respect of any property held
benami would get effaced once Section 4(1) operated,
even if such transaction had been entered into prior to the
coming into operation of Section 4(1), and henceafter
Section 4(1) applied no suit can lie in respect to such a
past benami transaction.  To that extent the section may be
retroactive."

In our view, similar is the position in law on the question
of retrospectivity  of section 4(2) of the Act.
Finally, this Court in the aforesaid decision held that the
decision in Mithilesh Kumari & Anr. Vs. Prem Behari Khare erred in
taking the view that under Section 4(2),  in all suits filed by persons in
whose names properties are held no defence can be allowed at any
future stage of the proceedings that the properties are held benami
cannot be sustained.  It was also held that Section 4(2) will have a
limited operation even in cases of pending suits after Section 4(2) had
come into force, if such defences are not already allowed.    The
decision in R. Rajagopal Reddy (Dead) by LRs. And Ors.  Vs.
Padmini Chandrasekharan (Dead) by LRs. 1995 (2) SCC 630 which
overruled the decision of two Judges Bench in the case of Mithilesh
Kumari and Anr.  Vs.  Prem Behari Khare 1989 (2) SCC 95 was also
approved by this Court in the  cases  of  Prabodh Chandra Ghosh  Vs.
Urmila Dassi AIR 2000 SC 2534 and  C. Gangacharan  Vs.
C.Narayanan  AIR 2000 SC 589.     In view of the aforesaid, this
question is, therefore, no longer res integra.  
Therefore, we are now to consider in this case
whether the 
facts disclosed would indicate that even after coming into force of the 
Act the defence under Secion 4 can be available.
Admittedly, the 
transaction in question was registered on  24th August, 1970.  
The suit 
was filed on 5th of July 1984 which was long before coming into force 
of the Act.  
It is an admitted position that the written statement in the 
suit taking plea of benami was also filed by the appellant long before 
the Act had come into force.  
Therefore, it was not a case where 
Section 4(2) of the Act will have a limited operation in the pending 
suit after Section 4(2) of the Act had come into operation.   
 It is true 
that the judgment of the trial court was delivered after the Act had 
come into force but that could not fetter the right of the appellant to 
take the plea of benami in his defence.  
Since the Act cannot have any 
retrospective operation in the facts and circumstances of the present 
case, as held by this Court in the aforesaid decision, we are therefore 
of the view that the appellant was entitled to raise the plea of benami 
in the written statement and to show and prove  that he was the real 
owner of the suit property and that the respondent was only his 
benamidar.  

Before parting with this judgment, we may take into
consideration of a short submission of the learned counsel for the
respondent.   The submission is that since the suit property was
purchased by the appellant in the  name of the respondent, the suit
property must be held to have been purchased by him for the benefit
of the respondent.
 Section 3 deals with Prohibition of benami 
transaction. 
 Sub-section (1) clearly prohibits that no person shall 
enter into benami transaction. 
 However,  sub-section (2) of Section 3 
clearly says that nothing in sub-section (1) shall apply to purchase of 
property of any person in the name of his wife, unmarried daughter 
and it shall be presumed, unless the contrary is proved, that suit 
property had been purchased for the benefit of the unmarried 
daughter.  

Section 3(2) makes it abundantly clear that if a property is 
purchased in the name of an unmarried daughter for her benefit, that 
would only be a presumption but the presumption can be rebutted by 
the person who is alleging to be the real owner of the property by 
production of evidences or other materials before the court.  In this 
case,  the trial court as well as the appellate court concurrently found 
that although the suit property was purchased in the name of the 
respondent but the same was purchased for the interest of the 
appellant.    We are therefore of the opinion that even if the 
presumption under section 3(2) of the Act  arose because of purchase 
of the suit  property by the father ( in this case appellant ) in the name 
of his daughter ( in this case respondent ), that presumption got 
rebutted as the appellant had successfully succeeded by production of 
cogent evidence to prove that the suit property was purchased in the 
benami of the respondent for his own benefit.

Let us now consider
whether the  concurrent findings of fact 
could be set aside by the High Court in the second appeal. 
 It is well 
settled by diverse decisions of this Court that the High Court in 
second appeal is entitled to interfere with the concurrent findings of 
fact if the said concurrent findings of fact are based on non-
consideration of an important piece of evidence in the nature of 
admission of one of the party to the suit,  which is overlooked by the 
two courts below ( See [2003 (7) SCC 481, Deva (Dead) Through 
LRs Vs. Sajjan Kumar (Dead) by LRs] ).  
It is equally well settled 
that under section 100 of the Code of Civil Procedure, High Court 
cannot interfere with concurrent findings of facts of the courts below 
without insufficient and just reasons. (See [2003(7)SCC 52, Sayeda 
Akhtar Vs. Abdul Ahad]).  
 In second appeal, High Court is also not 
entitled to set aside concurrent findings of fact by giving its own 
findings contrary to the evidence on record.   
(See  [ 2001 (4) SCC 
694, Saraswathi & Anr.  Vs.  S.Ganapathy & Anr.] ).

As held herein earlier the High Court had set aside the 
concurrent findings of fact not on consideration of the evidence 
adduced by the parties but set aside the concurrent findings of  fact on 
the basis of findings contrary to the evidence on record and without 
considering the findings of fact arrived at by the appellate court and 
the trial court.     
From the judgment of the High Court we further find 
that the concurrent findings of fact were set aside not on consideration 
of the findings of fact arrived at by the courts below but only on the 
basis of the arguments of the  learned Advocate of the respondent.  
This was also not permissible to the High Court in Second Appeal to 
come to a contrary findings of its own only on the basis of the 
arguments of the learned counsel for the respondent without 
considering the findings of the trial court as well as the appellate 
court.
(See [2002(9) SCC 735, Gangajal Kunwar (Smt.) and Ors. Vs. 
Sarju Pandey (Dead) by LRs & Ors.] ). 
 It is equally settled that High 
Court in second appeal is not entitled to interfere with the concurrent 
findings of fact arrived at by the courts below  until and unless it is 
found that the concurrent findings of fact were perverse and not based 
on sound reasoning.  
We ourselves considered the evidence on record 
as well as the findings of fact arrived at by the two courts below.  
From such consideration we do not find that the concurrent findings 
of fact arrived at by the appellate court as well as the trial court were 
either perverse or without any reason or based on non-consideration 
of important piece of evidence or admission of some of the parties.  
We are therefore of the view that the High Court was not justified in 
interfering with the concurrent findings of fact arrived at by the 
appellate court as well as the trial court which findings were rendered 
on consideration of the pleadings as well as the material ( oral and 
documentary )  evidence on record.  
For the reasons aforesaid this appeal is allowed.  The judgment 
of the High Court impugned in this Court is set aside and the 
judgments of the trial court as well as the appellate court are affirmed.  
The suit filed by the respondent shall stand dismissed.
There will be no order as to costs.

In a company petition, when the petitioner not gave fair fight and when compromised to the prejudice of other share holders, any share holder can question the same = for the purpose of recalling the order of dismissal of the said appeals, and for the transposition of the Chatterjee brothers as proforma respondents, whilst substituting the appellant as the sole appellant therein.= The said application is maintainable under Section 397, where the affairs of the company are being conducted in a manner that is prejudicial to public interest, or in a manner that is oppressive with respect to any member or members of the company.- where the Company Petition is filed with the consent of the other shareholders, the same must be treated in a representative capacity, and therefore, the making of an application for withdrawal by the original petitioner in the Company Petition, would not render the petition under Sections 397 or 398 of the Act 1956, non-existent, or non-maintainable. The other persons, i.e., the constructive parties who provide consent to file the petition, are in fact entitled to be transposed as petitioners in the said case. Additionally, in case the petitioner does not wish to proceed with his petition, it is not always incumbent upon the court to dismiss the petition. The court may, if it so desires, deal with the petition on merit without dismissing the same. Further, there is no requirement in law for the shareholder himself, to give consent in writing. Such consent may even be given by the power of attorney holder of the shareholder. If the shareholder who had initially given consent to file the Company Petition to help meet the requirement of 1/10th share holding, transfers the shares held 11Page 12 by him, or ceases to be a shareholder, the same would not affect the maintainability and continuity of the petition.

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 361-362 of 2005
Bhagwati Developers Private Ltd. … Appellant
Versus
The Peerless General Finance … Respondents
Investment Company Limited & Ors.
J U D G M E N T
Dr.B.S.Chauhan, J.
1. These appeals have been preferred against the judgment and
final order dated 24.11.2003 passed by the High Court of Calcutta in
APO Nos. 346 and 347, by way of which the High Court rejected the
claim of the appellant to maintain the Company Petition filed under
Sections 397 & 398 of the Companies Act, 1956 (hereinafter referred
to as the ‘Act 1956’).
2. Facts and circumstances giving rise to these appeals are that:Page 2
A. Shri S.K. Roy (Respondent No. 2) issued and allotted 30,000
shares of the Respondent No. 1 company to himself and his relatives,
and being the majority share holder therein, hence acquired control
over the respondent-company.
B. Shri Ajit Kumar Chatterjee (3.66% shares) and Shri Arghya
Kusum Chatterjee (1.01% shares) filed Company Petition No. 222 of
1991 under Sections 397 and 398 of the Act 1956, before the High
Court of Calcutta with the consent of M/s Bhagwati Developers Pvt.
Ltd. (4.78% shares) (hereinafter referred to as `the appellant’) and
Shri R.L. Gaggar (7.61% shares), alleging mis-management and
oppression.
C. Respondent No. 2 contested the said Company Petition by
raising the preliminary issue of maintainability, stating that the valid
shares held by the petitioners and consenting parties therein, were
valued at less than 10 per cent of the total shareholding, and thus, the
petition itself was not maintainable. The Company Court Judge vide
order dated 13/14.1.1992, dismissed the said Company Petition as not
maintainable, allowing the aforementioned preliminary objection,
without entering into the merits of the case.
2Page 3
D. Shri Ajit Kumar Chatterjee and Shri Arghya Kusum Chatterjee,
both petitioners therein, filed two appeals being Nos. 40 and 35 of
1992 respectively, before the Division Bench of the Calcutta High
Court challenging the dismissal of the Company Petition on the
ground of maintainability. Both the appeals were consolidated and
heard together.
E. On 16.11.1993, Shri Ajit Kumar Chatterjee joined the Board of
Directors of the company and filed applications for withdrawal of the
appeals. The Division Bench of the High Court, vide order dated
16.11.1993 allowed the said applications, and dismissed his appeal as
withdrawn. A similar order was passed by the Division Bench on
18.11.1993 while allowing a similar application filed by Shri Arghya
Kusum Chatterjee, and therefore, his appeal was also dismissed as
withdrawn.
F. The appellant filed two applications before the Division Bench
on 22.12.1993 for the purpose of recalling the order of dismissal of
the said appeals, and for the transposition of the Chatterjee brothers as
proforma respondents, whilst substituting the appellant as the sole
appellant therein. The Division Bench, vide order dated 2.2.1995
dismissed the said application by a detailed judgment, labelling the
3Page 4
appellant as a stranger having no locus standi whatsoever, and
observing that as the appeal was no longer pending, the question of
transposition of parties did not arise. Moreover, it was observed that
there had been an inordinate delay in the filing of such an application.
G. Aggrieved, the appellant preferred S.L.P.(C) Nos. 19193 and
19217 of 1995 before this court, challenging the order dated 2.2.1995.
This Court entertained the said petitions, granted leave, and disposed
of the appeals vide judgment and order dated 26.4.1996, observing
that the appellant may prefer independent appeals, challenging the
judgment and order dated 13/14.1.1992, passed by the learned Single
Judge, further stating that if such an appeal was infact filed, the same
would not be dismissed by the Division Bench on grounds of
limitation or locus standi. However, it would be open for Respondent
No.2 to contend, that the ground upon which the Company Court
Judge had dismissed the Company Petition, was indeed just, i.e. the
respondent could defend the order passed by the Company Court
Judge. Further, the effect of withdrawal of the appeals by Chatterjee
brothers on the appeals filed by the appellant, would also be
examined. Additionally, the dismissal of the appeals as withdrawn,
preferred by Chatterjee brothers, would not come in the way of the
4Page 5
appellant raising such contentions as are permissible and available to
it in law. This Court disposed of the said appeals without expressing
any opinion on merit.
H. In pursuance of the order dated 26.4.1996 passed by this Court,
the appellant preferred appeal Nos. 346 and 347 of 1996, which have
been dismissed vide impugned judgment and order dated 24.11.2003.
Hence, these appeals.
3. Shri Sunil Kumar Gupta, learned senior counsel appearing on
behalf of the appellant, has submitted that the High Court, while
dismissing the appeals filed by the appellant, failed to appreciate the
judgment and order of this Court dated 26.4.1996, wherein this Court
had held, that the issues of limitation and the locus standi of the
appellant would not be questioned. The Division Bench of the High
Court hence, ought not to have non-suited the appellants on the issue
of locus standi. The Chatterjee brothers had withdrawn their appeals,
and thus, the High Court has erred in its interpretation of the order of
this Court in correct perspective, and has therefore, rendered the
appellant remediless. Even if the said Company Petition had been
withdrawn, the appellant with whose consent the Company Petition
5Page 6
had been filed, was certainly entitled to revive the said Company
Petition, and to challenge the order of the Company Court Judge
before the Division Bench. It was not permissible for the Division
Bench to dismiss the applications filed by the appellant without so
much as going into the merits of the case, simply relying upon the
earlier Division Bench judgment and order dated 16.11.1993. Such a
course adopted by the High Court, has rendered the order of this Court
dated 26.4.1996, a nullity. Thus, the appeals deserve to be allowed.
4. Per contra, Shri Ashok H. Desai, Shri Bhaskar P. Gupta, Shri
Abhijit Chatterjee, Shri Jaideep Gupta, learned senior counsel
appearing on behalf of the respondents, have opposed the appeal
contending that Chatterjee brothers had withdrawn both their appeals,
as well as Company Petition No. 222 of 1991. Therefore, it was not
permissible for the appellant to move applications for impleadment
and transposition. It is evident that such applications cannot be
entertained where the Company Petition itself is not pending.
Furthermore, the learned Single Judge had rightly held, that the
present appellant and Shri R.L. Gaggar, the consenting parties, were
neither eligible nor competent to give such consent, as they did not
possess valid shares. Moreover, one of them had given consent
6Page 7
through the Power of Attorney holder, which is not in accordance with
law. This Court, vide its order dated 26.4.1996 did not set aside the
judgment and order of the High Court dated 16.11.1993. Thus, the
same has rightly been relied upon by the High Court in its impugned
judgment. The appeals are devoid of any merit, and are hence, liable
to be dismissed.
5. We have considered the rival submissions made by the learned
counsel for the parties and perused the records.
6. The right to apply for the winding up of a company is available,
provided that the applicant satisfies the requisite requirements under
Sections 397, 398 and 399 of the Act 1956, with respect to holding
10% shares in the total share-holding of the company. It is not
necessary that the petitioner(s) must hold the same individually. Such
a winding up petition can even be filed after obtaining the consent of
other shareholders, so as to meet the requirement of having an
aggregate of 10 per cent out of the total share-holding.
7. The said application is maintainable under Section 397, where
the affairs of the company are being conducted in a manner that is
7Page 8
prejudicial to public interest, or in a manner that is oppressive with
respect to any member or members of the company. (Vide: M.S.D.C.
Radharamanan v. M.S.D. Chandrasekara Raja & Anr., AIR 2008
SC 1738)
8. In Rajahmundry Electric Supply Corporation Ltd. by its
Vice-Chairman, Appanna Ranga Rao v. The State of Andhra, AIR
1954 SC 251, this Court, while dealing with a case under Section 397
of the Act 1956 and Section 153(c) of the Indian Companies Act,
1913, which were analogous to the provisions of Section 397 of the
Act 1956, held, that the issue of whether the petitioner had obtained
consent of the members of the company in order to meet the
requirements of holding 1/10th of the total shares, is to be examined in
light of whether such a number was infact attained and maintained on
the actual date of presentation of the Company Petition in court, and
in the event that a member later withdraws consent, the same would
not affect either the right of the applicant-petitioner to proceed with
the application, or the jurisdiction of the court to dispose of it on
merits.
8Page 9
9. In M/s. Dale and Carrington Invt. (P) Ltd. & Anr. v. P. K.
Prathapan & Ors., AIR 2005 SC 1624, this Court dealt with the
issue of transfer of shares without seeking the permission of the
Reserve Bank etc. and held as under:
“ On the question of locus standi the
learned counsel for the respondent cited
Rajahmundry Electric Supply Corporation
Ltd. v. A. Nageshwara Rao and others, AIR
1956 SC 213, wherein it was held that the
validity of a petition must be judged from
the facts as they were at the time of its
presentation, and a petition which was valid
when presented cannot cease to be
maintainable by reason of events
subsequent to its presentation. In S.
Varadarajan v. Venkateswara Solvent
Extraction (P) Ltd. and others (1994) 80
Company Cases 693, a petition was filed by
the applicant and four others under Sections
397 and 398 of the Companies Act. During
the pendency of the petition, the four other
persons who had joined the applicant in
filing the petition sold their shares thereby
ceasing to be shareholders of the company.
It was held that the application could not be
rejected as not maintainable on the ground
that the four shareholders ceased to be
shareholders of the company. The
requirement about qualification shares is
relevant only at the time of institution of
proceeding. In Jawahar Singh Bikram
Singh v. Sharda Talwar (1974) 44
Company Cases 552, a Division Bench of
the Delhi High Court held that for the
purposes of petition under Sections 397/398
it was only necessary that members who
9Page 10
were already constructively before the
Court should continue to proceedings. It is a
case in which the petitioner who had filed a
petition died during the pendency of the
petition. While filing the petition he had
obtained consent of requisite number of
shareholders of the company, among them
his wife was also there. The Court further
observed that since wife of the petitioner
was already constructively a petitioner in
the original proceedings, by virtue of her
having given a consent in writing, she was
entitled to be transposed as petitioner in
place of her husband.”
(Emphasis added)
10. Section 399 of the Act 1956, neither expressly nor by
implication requires, that the consent to be accorded therein, should be
given by a member personally, as the same can also be given by the
Power of Attorney holder of such a shareholder. Furthermore, the
issue of consent must be decided on the basis of a broad consensus
approach, in relation to the avoidance and subsistence of the case. The
same must be decided on the basis of the form of such consent, rather
on the substance of the same. There is hence, no need of written
consent, or even of the consent being annexed with the Company
Petition. (Vide: P. Punnaiah & Ors. v. Jeypore Sugar Co. Ltd. &
Ors., AIR 1994 SC 2258; and J. P. Srivastava and Sons Pvt. Ltd. &
Ors. v. M/s. Gwalior Sugar Co. Ltd. & Ors., AIR 2005 SC 83)
10Page 11
11. In view of the above, the case at hand is required to be
considered in the light of aforesaid settled propositions of law, which
provide that where the Company Petition is filed with the consent of
the other shareholders, the same must be treated in a representative
capacity, and therefore, the making of an application for withdrawal
by the original petitioner in the Company Petition, would not render
the petition under Sections 397 or 398 of the Act 1956, non-existent,
or non-maintainable. The other persons, i.e., the constructive parties
who provide consent to file the petition, are in fact entitled to be
transposed as petitioners in the said case. Additionally, in case the
petitioner does not wish to proceed with his petition, it is not always
incumbent upon the court to dismiss the petition. The court may, if it
so desires, deal with the petition on merit without dismissing the
same. Further, there is no requirement in law for the shareholder
himself, to give consent in writing. Such consent may even be given
by the power of attorney holder of the shareholder. If the shareholder
who had initially given consent to file the Company Petition to help
meet the requirement of 1/10th share holding, transfers the shares held
11Page 12
by him, or ceases to be a shareholder, the same would not affect the
maintainability and continuity of the petition.
12. The Company Court Judge dismissed the petition on merits,
vide judgment and order dated 13/14.1.1992. Appeals were preferred,
and the first appeal was withdrawn by Shri Ajit Kumar Chatterjee,
vide order dated 16.11.1993.
13. The said application was also opposed by another appellant,
namely, Shri Arghya Kusum Chatterjee. However, the court passed
the following order:
“In the instant case, as the applicant No. 1
goes out of the picture and the appeals in so
far as the appellant No.1 stand dismissed for
non-prosecution, the Company Petition is
not maintainable and the appeals are also not
maintainable in the same ground in view of
the fact that with regard to two other
appeals, one on the question of
maintainability of the appeal and the other
on the question of merit of the appeal. If the
maintainability of the appeal could not be
proceeded within that event the other appeal
also could not be proceeded with.
Accordingly, when one of the parties in
appeals does not want to proceed with the
appeals the Court has no jurisdiction to
compel that party to continue with the
appeals against his will. Further, if that party
is allowed to withdraw from the appeals and
if it is evident that the petition itself could
12Page 13
not be maintainable in the absence of that
party in that event the entire petition and/or
the appeal shall fail and could not be
proceeded with under the law. Accordingly,
both the appeals stand dismissed as the same
could not be proceeded with because of the
facts and circumstances stated above. The
applications filed today are allowed.”
14. The aforesaid order makes it clear that the Division Bench has
reasoned, that if a party is allowed to withdraw from the appeal, and it
is evident that in the absence of such party, the petition itself could not
be maintainable, then the entire petition and/or the appeal shall fail,
and cannot be proceeded with under the law. Such an observation has
been made by the Division Bench without examining the issue of
maintainability of the Company Petition on merits.
15. Another Chatterjee brother, namely, Shri Arghya Kusum
Chatterjee withdrew his Appeal No. 40 of 1992, vide order dated
18.11.1993. The Court observed, that in view of the order dated
16.11.1993, no order was necessary, for the reason that if one appeal
fails, the other cannot be maintained. The court further held:
“We place it on record that the appellant No.
2 does not wish to proceed with the above
appeals and also prays for dismissal of the
applications under Sections 397 and 398 of
13Page 14
the Companies Act which stand dismissed
by the order passed by the learned Trial
judge. So, it is placed on record that both
the appellant Nos. 1 and 2 do not wish to
proceed with the appeals which were already
dismissed by us for non – prosecution on
16th November, 1993.
Accordingly, both the applications are
disposed of.”
16. Immediately after the said withdrawal of the appeals, the
present appellant moved an application dated 22.12.1993, to recall the
aforesaid orders dated 16.11.1993 and 18.11.1993, and for transposing
the appellant in place of the Chatterjee brothers, while making them
proforma respondents. The said application was rejected by order
dated 2.2.1995, on the premise that the petitioners, as well as the
constructive parties, i.e., the consent givers had not obtained their
share holding validly. The appeals filed by the Chatterjees had been
withdrawn. Thus, in light of such a fact-situation, the question of
entertaining any application for either the addition or transposition of
parties, could not arise. The court further made a distinction between
the present case and Rajahmundry’s case, observing that the facts of
the case at hand, were quite distinguishable from those in
Rajahmundry’s case, as in the latter, the consenting party had
14Page 15
withdrawn its consent, while here, the constructive consenting party
has withdrawn its case.
17. The appellant being aggrieved, preferred appeals before this
Court, which were disposed of vide judgment and order dated
26.4.1996, giving liberty to the appellant to file an independent appeal
against the order of the Company Court Judge dated 13/14.1.1992.
Further, it was also open to the respondents to contend that the
company petition itself was not maintainable for the reason given by
the Company Court Judge, i.e. not having the requisite 10% share
holding. The said order dated 26.4.1996, was passed at the behest of
the respondents, with their consent, stating that they would not raise
the issues of limitation, or of the locus standi of the appellant.
18. In view of the above, the appellant preferred the appeals which
were dismissed vide impugned judgment and order dated 24.11.2003,
relying upon an observation made by the Division Bench earlier, to
the effect that, in view of the fact that the Chatterjee brothers had
withdrawn their appeals, and that the Company Petition had been
declared as not maintainable by the Company Court Judge, the
question of entertaining any appeal with respect to the same, could not
15Page 16
arise. After the withdrawal of the said appeals by the Chatterjees, the
appellant did not have any right to proceed with the original
application by any means, whatsoever.
19. The High Court in the impugned judgment, did not take into
consideration the effect of the order of this Court dated 26.4.1996, and
rendered the same a nullity, giving unwarranted weightage to the
earlier orders of the Division Bench dated 16.11.1993 and 18.11.1993,
for the reason that this Court, while passing an order on 26.4.1996, did
not set aside those orders, and therefore, the same remained intact.
Furthermore, the Court did not examine whether a petition filed in
representative capacity can be withdrawn unilaterally by the party
before the court, and what effect Order XXIII Rule 1 (5) CPC which
provides that court cannot permit a party to withdraw such a case
without the consent of the other parties, would have.
20. The courts have consistently held, that a suit filed in
representative capacity also represents persons besides the plaintiff,
and that an order of withdrawal must not be obtained by such a
plaintiff without consulting the category of people that he represents.
The court therefore, must not normally grant permission to withdraw
16Page 17
unilaterally, rather the plaintiff should be advised to obtain the
consent of the other persons in writing, even by way of effecting
substituted service by publication, and in the event that no objection is
raised, the court may pass such an order. If the court passes such an
order of withdrawal, knowing that it is dealing with a suit in a
representative capacity, without the persons being represented by the
plaintiffs being made aware of the same, the said order would be an
unjustified order. Such order therefore, is without jurisdiction. (Vide:
Mt. Ram Dei v. Mt. Bahu Rani, AIR 1922 Pat. 489; Mt. Jaimala
Kunwar & Anr. v. Collector of Saharanpur & Ors., AIR 1934 All.
4; and The Asian Assurance Co. Ltd. v. Madholal Sindhu & Ors.,
AIR 1950 Bom.)
21. The relevant parts of the impugned order provided as under:
I. Now the crucial question comes for consideration that when it
is established fact as evident from the reading of the order of the
Hon’ble Supreme Court that there was no existence of the original
Company Petition since withdrawal of the Chatterjee brothers, can
there be any existence of any appeal arising out of the said Company
Petition and in our considered view the only answer to this crucial
question must be in the negative.
17Page 18
II. According to the observation of the learned Single Judge the
Company Petition was invalid and ineffective at the time of its
institution, because, one of the Chatterjee brothers was not a
"member" within the meaning of the Companies Act and at the same
time one of the consenting parties namely, R.L. Gaggar had
withdrawn his consent soon after filing of the original application and
on both these counts, even if the Chatterjee brothers had not
withdrawn, the Company Petition could not be accepted as a valid
petition in the eye of law and we have already recorded that these
findings of the learned Single Judge were upheld by the Division
Bench while disposing of the petitions filed by the BDPL and even
taking the risk of repetition it can be stated that the Hon'bIe Supreme
Court did not interfere with the findings of the Division Bench in this
regard while recording its order dated 26th April, 1996.
III. We are of the view that the order of the previous Division Bench
dated 16th November, 1993 and 2nd February, 1995 were not touched
by the Hon'ble Supreme Court regarding recognition of the
withdrawal of Chatterjee brothers both from the appeals as well as
from the original Company Petition and in that background the
present appellant being a consenting party, and that consent too not
being above legal scrutiny, has no legal right to proceed with the
present appeals without the original application out of which the
appeals arose and which is non-existent in the eye of law.
And finally, it was held as under:
18Page 19
IV. Thus, for the reasons recorded hereinabove, we are of the view
that the present appeals are not maintainable and on this ground alone
the present appeals are liable to be dismissed and there is no
requirement in the eye of law to enter into the other aspect of the
matter touching maintainability of the original Company Petition.
22. In our humble opinion, the Division Bench has gravely erred in
taking the aforesaid view, as the same renders the order of this Court
dated 26.4.1996, a nullity. This Court had passed the order after
hearing the present respondents on the basis of suggestions made, and
concessions offered by them. It was in fact, suggested by the learned
counsel appearing on behalf of the respondents, that if the appellant
prefers such appeals in the High Court even now, the respondents
shall not raise any objection on the ground of limitation, and that they
would not also object on the ground of the locus standi of the
consenting shareholders. Thus, the same makes it clear, that the right
of maintenance of an appeal against the judgment of the learned
Single Judge dated 2.2.1995, was in fact an offer made by the
respondents themselves, with a further undertaking being provided by
them with respect to the question of limitation and locus standi of the
appellant, stating that the same would not be raised. What was granted
to them, was only permission, to raise the contention that, as on the
19Page 20
date of actual filing of the Company Petition before the company
court Judge, the petitioners alongwith the constructing parties, had 10
per cent share holding out of the total stakeholding of the company .
 The aforesaid terms of this Court have made it crystal clear, that
this Court was entirely oblivious of the fact that there had been two
orders passed by the Division Bench, permitting the withdrawal of the
appeals and further, dismissing the application of the appellant for
recalling the said orders. If this Court did not set aside the said
orders, we fail to understand the purpose of asking the appellant to file
an appeal against the judgment and order of this Court dated 2.2.1995.
Thus, by the impugned order, the High Court has rendered the entire
exercise undertaken by this Court, a futile one. In our humble
opinion, the Division Bench has hence, erred gravely.
23. We do not find any force in the submissions made by Shri
Desai, to the effect that in view of Rule 88(2) of the Rules 1959, the
CPC had no application to the facts of the instant case. Rule 88(2)
reads, that a petition under Sections 397 and/or 398 of the Act 1956,
shall not be withdrawn without the leave of the court, and therefore, as
per Shri Desai, the provisions of the CPC, as have been applied in the
20Page 21
case on which Shri Gupta has relied upon, have no application in the
instant case. Rule 6 reads as under:
“Save as provided by the Act or by these
rules the practice and procedure of the Court
and the provisions of the Code so far as
applicable, shall apply to all proceedings
under the Act and these rules. The Registrar
may decline to accept any document which
is presented otherwise than in accordance
with these rules or the practice and
procedure of the Court.”
24. It has been submitted by Shri Ashok H. Desai, learned senior
counsel appearing on behalf of the respondents, that the phrase “so far
as applicable”, excludes the application of the CPC where a particular
procedure is prescribed in the Rules itself, and as Rule 88(2) provides
that any withdrawal will only be permitted with the leave of the court,
no further requirement can be presumed.
25. We do not agree with such an interpretation, particularly with
respect to a phrase, which has been considered by this Court time and
again.
26. In City Improvement Trust Board, Bangalore v. H.
Narayanaiah etc. etc., AIR 1976 SC 2403, this Court held, that the
21Page 22
aforesaid phrase means, “what is not either expressly provided for, or
applicable by way of necessary implication, must be excluded”.
27. Similarly, in the case of Maktool Singh v. State of Punjab,
AIR 1999 SC 1131, this Court held, that this phrase means, that a
court/authority can exercise power only to the extent that such powers
are applicable. In other words, if there is an interdict against the
applicability of the said provisions, the court cannot use such
provisions.
28. If the interpretation given by the Division Bench of the High
Court is accepted, it would not merely render the appellant remediless
at whose instance, this Court had passed the order dated 26.4.1996,
but would also defeat the doctrine embodied in the legal maxim, ‘Ubi
jus ibi idem remedium’ (where there is a right, there is a remedy).
This Court dealt with the aforesaid doctrine in Dhannalal v.
Kalawatibai & Ors., AIR 2002 SC 2572 and held, that “if a man has
a right, he must have the means to vindicate and maintain it, and also
a remedy, if he is injured in the exercise and enjoyment of the said
right, and that it is indeed, a vain thing to imagine a right without a
22Page 23
remedy, for the want of a right and the want of a remedy, are
reciprocal”. (See also: Smt. Ganga Bai v. Vijay Kumar & Ors., AIR
1974 SC 1126)
29. It was respondent no.1 who had suggested to this Court to
dispose of the appeal filed by the appellant, while giving it liberty to
file an appeal against the order of the Company Court Judge.
Therefore, it was not permissible for respondent no.1 to agitate the
issue with respect to the fact that as the Supreme Court had not set
aside the orders dated 16.11.1993 and 18.11.1993, passed by the
division bench of the Calcutta High Court, the same remained intact.
Such an argument could not have been advanced by respondent no.1
before the division bench, in view of the legal maxim, ‘Actus Curiae
Neminem Gravabit i.e. an act of Court shall prejudice no man’. This
Court dealt with the said maxim in Jayalakshmi Coelho v. Oswald
Joseph Coelho, AIR 2001 SC 1084, and explained its scope,
observing:
“….where the order may contain something
which is not mentioned in the decree would
be a case of unintentional omission or
mistake. Such omissions are attributable to
23Page 24
the Court who may say something or omit to
say something which it did not intend to say
or omit. No new arguments or rearguments on merits are required for such
rectification of mistake.”
The order of this Court dated 26.4.1996, if given strict literal
interpretation, would render the appellant remediless, which is not
permissible in law. (Vide: Rameshwarlal v. Municipal Council,
Tonk & Ors., (1996) 6 SCC 100).
30. In view of the above, we are of considered opinion that the
Division Bench erred in holding that after the judgment of this Court
dated 26.4.1996, it was permissible for the High Court to hold that the
Company Petition under Sections 397/398 of the Act 1956, was nonexistence in the eyes of law while placing reliance on the earlier
judgments of the Division Bench of the High Court dated 16.11.1993
and 18.11.1993.
Thus, the appeals are allowed, the impugned judgment and
order of the High Court dated 24.11.2003 is hereby set aside and the
matters are remanded to be decided by the High Court of Calcutta
afresh giving strict adherence to judgment of this Court dated
26.4.1996. While deciding the case afresh, the Division Bench shall
24Page 25
not take note of the earlier judgments of the High Court dated
16.11.1993 and 18.11.1993.
As the matters are pending since long, in the facts and
circumstances of the case, we request the Hon’ble High Court to
decide the appeals expeditiously preferably within a period of six
month from the date of filing of certified copy of this judgment and
order before the High Court. There shall be no order as to costs.
….……………………………...................................J.
 (Dr. B.S. CHAUHAN)
…..………………………….. ...................................J.
 (FAKKIR MOHAMED IBRAHIM KALIFULLA)
NEW DELHI;
April 4, 2013.
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